-- Robert T. Kiyosaki
The Attorney Breakfast Club has the following seats available. For more information or to reserve your seat, please contact firstname.lastname@example.org
Don’t see your seat here? Contact us for information on how to create a specialized seat, email@example.com.Read More
Slip and Fall Accidents at a Private Home Slip and fall injuries make up the majority of the most commonly reported personal injury cases in the United States. The owners of establishments that are open to the public are usually held liable whenever such accidents occur on their premises. But what happens if the accident […]Read More
Three common construction contract provisions—hold harmless, indemnification, and duty to defend—are often found together taking a form something like this:
The undersigned agrees to indemnify, defend and hold harmless [NAME OF PARTY] against all claims related to the work including but not limited to…
Most contractors find them hard to understand, they assume the terms are interchangeable and have the same meaning, and therefore do little to push back thinking that’s just the way it is.
In reality, however, these provisions are not the same, and each one has different and serious implications.
Hold harmless. If drafted correctly, a “hold harmless” clause has the effect of having the holder avoid liability for certain damages or claims as set out in an agreement. Typically, a contractor would be agreeing to hold the homeowner harmless from liability, or a subcontractor would hold the GC harmless from liability. In either case, if a claim is made, the one in whose favor the hold harmless is written gets to transfer the claim to the one who agreed to hold them harmless.
Indemnify. This clause not only shifts liability from one party to another but requires the indemnifying party to compensate the indemnified party for any loss. Indemnification clauses, more so than a hold harmless or duty to defend, need to be drafted carefully and in accordance with applicable guidelines which differ from jurisdiction to jurisdiction. Not crafted correctly and they will be unenforceable.
Duty to defend. This clause means just what it says and is a separate and distinct obligation from any duty to indemnify or a duty to hold harmless. The duty to defend requires one to provide a defense and pay the legal expenses associated with such defense—no small obligation, especially when you consider this duty is triggered whatever the merits of the claim may be.
Because construction disputes so often involve multiple parties and complex issues, the potential costs associated with each of these provisions can be very significant. Indeed, the cost of a legal defense can quickly outpace the cost of the actual underlying claim. For example, a plumber brought in on a house remodel might only have a $10,000 contract to repipe the master bathroom. But when the plumber not only agrees to hold the G.C. harmless but also to indemnify and defend the G.C. if a claim arises associated with the plumber’s work, the plumber might find himself with an obligation many times larger than his contract and hisRead More
Whether a project is big or small, it seems inevitable that construction defect claims will surface. While the nature of these claims many vary, common patterns are generally present and construction professionals would do well to understand the distinctions.
Construction defect claims often fall into one of four categories: design defects, material defects, workmanship defects and subsurface defects.
Design professionals (such as architects and engineers) sometimes cause design defects. Building design can lead to issues in a structure’s performance, even if the design plans are followed precisely by everyone building the project. For example, complicated roof structures can lead to cracks, water intrusion or increased susceptibility to wind damage.
There can be material defects resulting from inferior or defective building materials. Using inadequate materials in a project can result in issues. For example, even though a window is properly installed, if it was manufactured and delivered with a defective seal, it may still become the source of future problems.
Workmanship defects are most often the leading cause of defect claims, leading to all types of construction problems. Even when plans are properly drawn and only the highest quality materials are delivered to the work site, careless installation can turn a project into a nightmare.
Of course, subsurface defects sometimes exist. They result from problems with the actual construction site, such as expansive soil conditions, subsidence issues or contaminated soils.
Several avenues are available to challenge all of these types of construction defect claims:
1. Procedural Prerequisites: Several states have enacted laws requiring a claimant to provide notice of the alleged construction defects and to provide those that may have caused them an opportunity to fix them. In most instances, this is a prerequisite to begin litigation. If the claimant fails to do this, then the defect claim may be (at least temporarily) barred.
2. Statutes of Limitation: Once a claimant discovers or should have discovered the construction defect, most states have a time period (often four years) within which the claim must be brought to court. If the claimant fails to bring the claim during the allotted time period, then the claim may be time-barred.
3. Statutes of Repose: Similarly, most states have set a time period (often 10 to 12 years) within which a claim can exist. Under such a statute of repose, if a claim is not brought within the stated time period, it will not be allowed at all, whether the defect was actually discovered or not. ThisRead More
You’re upset with how you’re being treated on the job. Payments due are being disputed, unreasonably you believe. The schedule is out of wack and there’s no sign of it getting any better any time soon. And changes continue to be requested.
You think enough is enough and plan to just stop working until things are resolved to your satisfaction. But hold on – while this may give you some emotional satisfaction, it may not be the best idea.
Ceasing work comes with very significant risks, and you could quickly find yourself on the other side of a lawsuit for big damages.
Before you pull the plug, look at your actual contract. It likely makes very clear what you can and cannot do regarding termination. For sure, written notice and some opportunity to cure maybe part of what you agreed to when you entered into the contract. Next, figure out how much you’ve been paid and how much work you’ve actually done – does one exceed the other?
Finally, have you thought of setting up a face to face meeting with the person who hired you? There may be a compromise position which makes more economic sense.
It’s easy to walk off a job; it’s a lot harder to deal with the aftermath.Read More
If a joint venture is in your future, you should be asking yourself, what is the objective?
What are you trying to achieve by this joint venture? Are you trying to obtain a specific contract for work you can’t do yourself? Do you need more capital or a higher bonding capacity? Maybe you need folks with more experience or is this a qualification issue?
A true joint venture is a separate entity created by two or more parties or entities. It could be two individuals; it could be two or three or four companies, all coming together to create a new entity. That new entity populates itself with employees; it has its own license, insurance and bonding; has its own management; and has its own bank accounts, profits and losses. One of the benefits of a joint venture is that it spreads the risk among multiple parties. Another is that it allows the joint venture to present more experience as a group than anyone of the joint venture partners might be able to do individually.
One disadvantage, of course, is that you now have to split yourself between your own business and the joint venture. Can you deal with both at the same time?
As you proceed with a true joint venture, you will need to create a separate entity. Will that be an LLC, a limited partnership or a corporation? You’ll need to determine, from a tax perspective, which of these structures is most beneficial to the joint venture as well as its partners.
Often there is a majority and minority joint venture member. The majority member uses its bonding capacity, backed up by the credit of the minority member. As well it is the insurance of the majority member that is used – an additional insured entity under the majority member’s insurance. Keep in mind that this additional exposure will erode potential limits on the majority member’s policy if a claim is made. Members need to be sure they have enough coverage to address the joint venture’s potential liabilities as well as their own.
The single most significant issue for any joint venture may be licensing. The fact that one or more of the joint venture members may be licensed contractors will not automatically cause the joint venture as a separate entity to be licensed. Every entity needs a license, its own license, to perform a service. There is a process that the DepartmentRead More